Perth-based transport group Stagecoach has hit out at the Department for Transport after being disqualified from bidding on three rail franchises due to a pensions row.
Stagecoach chief executive Martin Griffiths said he was “shocked” after the firm was told verbally by a senior official its bids were “non-compliant”.
The transport giant had been shortlisted for the East Midlands, South Eastern and the West Coast franchises.
Bidders had been asked to bear the full long-term funding risks on relevant sections of the Railways Pension Scheme.
Stagecoach claimed the Pensions Regulator is seeking additional funding because of “serious doubts” over the Government’s ongoing support for the industry-wide scheme.
The firm’s chief executive Martin Griffiths said the Pensions Regulator has indicated that an additional £5 billion to £6bn would be needed to plug the gap in train company pensions.
“Along with many other train companies, we believe strongly that the private sector should not be expected to accept material risks it cannot control and manage,” he said.
“Forcing rail companies to take these risks could lead to the failure of more rail franchises and cannot be in the best long-term interests of either customers, employees, taxpayers or the investors the railway needs for it to prosper.
“It also further damages the already fragile investor confidence in the UK rail market and it undermines the involvement of two of the last British transport groups who are part of running Britain’s railway.”
The Department for Transport yesterday announced Abellio will run the East Midlands franchise from August.
Stagecoach had been bidding for this franchise independently. The firm had been bidding in partnership with Alstrom for South Eastern and Virgin Group and SNCF for the West Coast franchise.
A DfT spokesperson said: “Stagecoach is an experienced bidder and fully aware of the rules of franchise competitions.
“It is regrettable that they submitted non-compliant bids for all current competitions which breached established rules and, in doing so, they are responsible for their own disqualification.”
Mr Griffiths said he was “extremely concerned” at the DfT’s decision, given that it had “full knowledge of these bids for a lengthy period”.
He said he would be seeking an urgent meeting with the DfT and also called for an independent “value for money” review.
